{"id":18877,"date":"2022-09-20T22:18:37","date_gmt":"2022-09-20T19:18:37","guid":{"rendered":"https:\/\/fractory.com\/?p=18877"},"modified":"2024-09-26T17:43:32","modified_gmt":"2024-09-26T14:43:32","slug":"design-to-cost-dtc","status":"publish","type":"post","link":"https:\/\/fractory.com\/design-to-cost-dtc\/","title":{"rendered":"Design to Cost Principles Explained"},"content":{"rendered":"

Design to Cost is a part of Design for Excellence (DFX)<\/a> philosophy along with its other branches such as Design for Manufacturing (DFM)<\/a>, Design for Assembly (DFA), Design for Supply Chain (DFSC) and Design for Sustainability (DFS)<\/a> to name a few.<\/p>\n

As over 70% of the product\u2019s final cost is determined during the design stage, Design to Cost methodology is an important approach for manufacturing companies to achieve a more precise cost estimation.<\/p>\n

What Is Design to Cost?<\/h2>\n

Traditional approaches have considered product cost an important factor in later development stages and independent from design decisions. This can result in estimated product costs that are significantly higher than target costs. In some cases, even redesign might be needed which would become an additional investment.<\/p>\n

Design to Cost or Design for Cost or DTC is a cost management principle that accounts for development, production and service costs at the design stage. Design to Cost also aims to implement the necessary cost strategy during the development cycle of the project so that cost targets will become independent variables to guide the decision-making.<\/p>\n

Design to Cost shouldn’t be seen as the same as target costing<\/a>. While target costing takes a broader approach\u2014encompassing administrative, marketing and other activities\u2014DTC focuses exclusively on managing costs during the design phase. In target costing, a specific cost target is set from the start, whereas DTC integrates cost management as a guiding factor throughout the design process to ensure that cost targets are met without requiring later adjustments or redesigns.<\/p>\n

Design to Cost Phases<\/h2>\n

To implement effective DTC before the production process, a strategic foundation should be followed.<\/p>\n

Defining Target Cost<\/h3>\n

The first stage in applying design to cost is to define the acceptable cost of the final product. This can be done by creating multiple standards or tiers for the outcome. The basic standard or lower tier would have only the essential quality and functionality. A tier above this would have some innovation and extra features. The top tier would add even more functionality and luxury. The latter can also be considered as design to value, a concept explored in cost and value engineering<\/a>, which looks at optimising cost efficiency while maintaining high product value and functionality.<\/p>\n

Depending on the project type, any one of these tiers can be used as a starting point at this stage. This is an essential part of DTC as it will help to understand the needs and scopes of the client and lay out the framework for the following stages.<\/p>\n

Cost Management and Cost Reduction Strategies<\/h3>\n

This stage is at the core of Design to Cost methodology. The following section will lay out different cost drivers to bear in mind in the product design phase that will influence the final product’s price.<\/p>\n

Design standardisation<\/h4>\n

One of the most important aspects of design development in any manufacturing industry is the standardisation of design across the product range. This should take into account any materials used while aiming for modular design as this helps to reduce fixed costs greatly. This strategy is definitely not exclusive to Design to Cost methodology as it is also one of the key focus points for Design for Assembly<\/a> & Design for Manufacturing & Assembly<\/a>.<\/p>\n

Use of standard parts<\/h4>\n

The use of standard parts is another great way to further reduce production costs. Collaboration with the suppliers of these parts can also increase flexibility. When standardisation is implemented across the entire supply chain, it reduces the set-up and inventory cost, thereby simplifying supply chain management. Thus this strategy is also in the focus of Design for Supply Chain<\/a>. And finally, there is the added benefit of reducing costs associated with R&D.<\/p>\n

Geographical factors<\/h4>\n

Manufacturing location is a crucial aspect of cost management. There are multiple important geographical factors to consider while making this decision such as supply chains and ecosystems, the availability of components, matters related to labor, taxes and duties.<\/p>\n

Packaging & transportation<\/h4>\n

Weight and volume are the keywords when considering transportation and together with packaging, these should be accounted for in the design process.<\/p>\n

Waste minimisation<\/h4>\n

One of the most important concepts in terms of waste minimisation is lean manufacturing<\/a>. The focus here is on reducing waste in all production stages. Any feature on the final product that doesn’t add value to the client is also seen as waste and should be thus removed from the product at this stage.<\/p>\n

Maintenance<\/h4>\n

While not a part of the production process, maintenance<\/a> should not be forgotten as a cost within the design. The right design decisions can increase maintenance intervals and accessibility for difficult areas. Having a maintenance-friendly design in focus can thus reduce future costs after the production cycle.<\/p>\n

None of these factors can be viewed in isolation as they’re all intertwined and have direct costs. Design to Cost should always be seen as a wide-ranging approach that can include a multitude of concepts. Depending on the project type and requirements, the design team should decide which aspects are most appropriate when considering DTC.<\/p>\n

Analysing Results<\/h3>\n

This is the most important stage in DTC as it will determine manufacturing decisions. When analysing results it is important to evaluate if the design at hand fits the objectives or if it can be improved. The design to cost process should be repeated until the design fits the objectives, surpasses them or cannot be improved further.<\/p>\n

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